Once the Fukushima nuclear plant is stable, the government should temporarily nationalise its operator.

“THIS is a war between humans and technology. While that
war is being fought, we should not talk about bankruptcy.” So says a Japanese
official responsible for channelling the first tranche of ¥5 trillion ($64
billion) in government support to Tokyo Electric Power (Tepco) following the meltdown
of its three reactors at Fukushima Dai-ichi nuclear power plant after the
tsunami on March 11th.

The support has two valid aims. It helps pay compensation
to the 89,000 people forced to abandon their homes within a 20km (12.5-mile)
radius of the plant: in the twilight zone only farm animals and the odd feral
ostrich roam the streets . It also spares Tepco the chaos of insolvency as it
races towards a year-end deadline for Fukushima’s full shutdown.

Don’t let it off the hook

Yet the aim must surely be to create a stronger, safer
energy industry as well. Tepco’s continued existence as a private, gravely
crippled entity works against that. The government should act fast to
nationalise Tepco and hold it temporarily in public ownership as it clears out
the old management and oversees the clean-up. Then it should reprivatise a
thoroughly reformed utility. Three reasons argue for Tepco to be nationalised.

First, as a basis for holding the company to account.
Despite failing to anticipate the devastating earthquake and tsunami, and a
dismal performance after they hit, Tepco’s management remains broadly in place,
and shareholders and creditors are being bailed out. Injecting money into the
company smacks of the sort of complicity between the nuclear industry and its
political overseers that helped get Japan into this nuclear mess. Though the ¥5
trillion will pass through Tepco’s hands, the company has no legal obligation
to register it as a loan on its balance-sheet or say how it will be repaid. For
now, taxpayers, not the shareholders or bondholders, bear all the risk.

Second, to ensure that Tepco’s financial restructuring is
safe. The firm has agreed to cut costs by ¥2.5 trillion over the next ten
years, but this may well compromise safety. Already there are reports of
workers slopping about in radioactive water wearing leaky boots. In the short
run the state can better oversee this transition as an owner with day-to-day
responsibilities, before privatising Tepco in order to re-establish the
necessary division between operator and regulator.

Third, as a demonstration that the government will no
longer grant special favours to the nuclear industry. Failure to intervene
would underline how Tepco, along with Japan’s other power utilities, continues
to intimidate the government. The utilities have huge political power, helped
by a pliant media and the support of big businesses selling services at
inflated prices. If the government fails to discipline Tepco, it will struggle
to win the country’s confidence over other aspects of nuclear oversight. That
includes the promise by Yoshihiko Noda, the prime minister, to conduct “stress
tests” to ensure that the rest of Japan’s 54 nuclear reactors, most of them now
suspended, can safely be restarted.

At Fukushima, more bills will come due, including for
removing radioactive topsoil from a vast area. The longer the government
dithers over nationalising Tepco, the more the costs will rise and the impetus
for action will wane. Tens of thousands have lost homes, businesses and confidence
in their children’s health as a result of the disaster at Fukushima. Don’t let
their suffering be for nought.